Pivot Party

Once again, the stock market is rallying to all-time highs on the hopes the Fed’s much anticipated rate cut is just around the corner. After Fed chairman Jerome Powell’s testimony last week, the market is pricing nearly a 90% probability of a September rate cut of 25 basis points. Here’s a one-year look at the S&P Chart through Friday July 12th:

The S&P is trading right at all-time highs in anticipation of the rate cut. On top of this, the bond markets and smaller cap stocks are beginning to behave like they did in the fourth quarter of 2023 in anticipation of the March rate cut that never transpired.? Here’s the one-month chart of the S&P (in purple) the Bloomberg US Aggregate Bond index (in orange) and the Russell 2000 Index (in blue). The “Pivot Party” is on!

Will this be the real deal or is this another head fake?? The bottom line is that it is too soon to tell. But whether the cut comes in September, I think we can look to the November -December 2023 market to get some sense of what may happen in anticipation of the September rate cut.

Small Caps ran early (as they just did this past week) and proceeded to lead into the close of the year. Stocks were strong in general, and bonds produced a very large return relative to their norm. If late 2023 is a decent analog, we shouldn’t be surprised if the markets perform similarly for the remainder of the summer. Come September three things will determine what happens in markets for the remainder of the year: 1) Actual rate cuts, 2) Corporate earnings, and 3) GDP growth. If we get the cuts, earnings and earnings guidance remain strong, and we avoid recession, then the rest of the year is likely to be very good. If we falter on any of these points, times may be less rosy. But for now, the Pivot Party is on!

The S&P 500 Index, or Standard & Poor's 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The S&P 500 index is regarded as one of the best gauges of prominent American equities' performance, and by extension, that of the stock market overall.

The Russell 2000 tracks the roughly 2000 securities that are considered to be US small cap companies. The Russell 2000 serves as an important benchmark when investors want to track their small cap performances versus other sized companies. The Russell 2000 tends to have a larger standard deviation in comparison to the S&P 500.

The Bloomberg US Aggregate Bond Index (^BBUSATR) is used as a benchmark for investment grade bonds within the United States. This index is important as a benchmark for someone wanting to track their fixed income asset allocation.=

The Russell 2000 tracks the roughly 2000 securities that are considered to be US small cap companies. The Russell 2000 serves as an important benchmark when investors want to track their small cap performances versus other sized companies. The Russell 2000 tends to have a larger standard deviation in comparison to the S&P 500.

The Bloomberg US Aggregate Bond Index (^BBUSATR) is used as a benchmark for investment grade bonds within the United States. This index is important as a benchmark for someone wanting to track their fixed income asset allocation.

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No investment strategy can assure success or completely protect against loss, given the volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.

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WealthPlan Investment Management (“WPIM”) uses data compiled and/or prepared by third parties (“Third Party Data”) in the delivery of Licensed Research and Data. Third Party Data is not owned by WPIM and user may be required to obtain permission directly from third parties for further use of Third-Party Data and may be required to pay a fee depending on the use contemplated by the user.istered investment advisor, but is the holding company for WealthPlan Partners LLC and WealthPlan Investment Management, LLC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed.

No investment strategy can assure success or completely protect against loss, given the volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.

The information in this communication applies solely to the intended audience and in no way amends, revokes, or otherwise alters the existing agreements and relationships between WPIM and its clients.? This communication is not a binding offer, expressed or implied.? WPIM undertakes no obligation to update or revise the information herein or in any referenced third-party resource due to new information, future events or circumstances, or otherwise.

WealthPlan Investment Management (“WPIM”) uses data compiled and/or prepared by third parties (“Third Party Data”) in the delivery of Licensed Research and Data. Third Party Data is not owned by WPIM and user may be required to obtain permission directly from third parties for further use of Third-Party Data and may be required to pay a fee depending on the use contemplated by the user.